Mumbai: The employees provident fund (EPF) board may consider the option of investing five per cent of the EPF corpus in stocks, union labour minister Oscar Fernandes said ahead of the meeting of the EPF board of trustees to finalise the interest rate for 2007-08.

Fernandes said the option to make investment in the capital market was "still open". This may help pay higher returns to EPF subscribers, he told a meeting of economic editors.

The minister said he had discussed the matter informally twice with the EPF board members and would take up the issue once again with them to evolve a consensus.

"Since the board members, including those belonging to Left trade unions, do not agree to such an investment in view of volatility in the stock market, we will try to find out other safer options like bonds," he said.

The proposal, which had come up at the EPF board meeting in July, however, did not find favour with members, mostly belonging to Left trade unions who were opposed to investing money in the capital market. But now the situation being different, the proposal might be re-examined and the bull run could take away some sting from the argument of investing in the capital market.

The over four crore EPF subscribers currently get 8.5 per cent interest despite repeated demands, especially by Left parties, to raise the rate to 9.5 per cent.

The EPF had a corpus of around Rs104,000 crore as of 31 March 2007 and a major chunk of it is parked in the special deposit scheme (SDS), earning only 8 per cent interest for the fund. Sources said the EPFO would use fund managers to manage its capital market investments that would mostly be made in mutual funds or blue-chip companies.